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PAPER IE01: PRINCIPLES OF ACCOUNTING

Syllabus Overview
This paper deals with very basic concepts of accounting and information systems. The prime focus of
this is to bridge a linkage between professional management accounting education and young learners
who are joining to this profession after finishing their higher secondary school certificate examination.
The course mainly covers basics of financial accounting along with a modest introduction of cost
accounting and management accounting. At the same time, the paper puts an earnest effort to bring the
logic of information systems with accounting mainly focusing on how accounting can work as an
information system in a practical set up. The main purpose of this course unit is to provide an
understanding of accounting concepts and the accounting process encompassing the preparation of
financial statements so that it can provide a significant relief to the students in their further studies at
upper levels.
Expected Outcomes of the Course Unit
On successful completion of this course unit the students will be able to:
(i) Identify and describe the principles and concepts of financial accounting;
(ii) Illustrate the impact of business transactions on the accounting equation;
(iii) Record transactions in books of accounts;
(iv) Prepare basic financial statements ;
(v) Understand cost and management accounting basics; and
(vi) Evaluate accounting as an information system.
Syllabus Structure
The syllabus comprises the following main topics with the relative study weightings:
Segment Topic
Weight (%)
A
Accounting Environment
15
B
Transaction Analysis, Journal, Ledger and Trial Balance
25
C
Completion of Accounting Cycles, Worksheet, Financial Statements
30
D
Introducing cost and management accounting
15
E
An Introduction to Accounting Information Systems
15
Assessment
There will be a written examination paper of three hours. The examination paper will have the following
sections:
Section A 50 marks
Five compulsory medium answer questions will be given carrying ten marks each. Short scenarios may
be given to which some or all the questions relate.
Section B 50 marks
One or two compulsory questions will be given. Short scenarios may be given, to which questions relate.

IE01 A Accounting Environment (15%)


Learning outcomes
On completion of their studies students should be able to:
Lead
Component
1. Explain the local
(a) state accounting environment;
environment.
(b) list the agents of local accounting environment;
(c) list professional accounting organizations in
Bangladesh;
(d) explain the applicability of accounting standards
in Bangladesh.

2. Explain the global


environment.

3. Explain the
accounting
profession.

Indicative syllabus content


Level
1
1
1
2

(a) state accounting environment from a global


perspective;
(b) list global market players dealing with
accounting environment
(c) list global professional accounting organizations.

(a) explain the background to the formation of


ICMAB and ICAB;
(b) explain the role of ICMAB in developing the
practice of management accounting.
(c) explain the role of ICAB in developing the
practice of financial accounting and reporting.

1
1

Define accounting, environment and accounting


environment.
Identify regulators, academics, market, companies
and others who plays role ensuring accounting
environment.
Introduce ICMAB and ICAB with prospective role in
ensuring professional accounting environment.
Introduce GAAP, BAS, BFRS and BCAS.
Accounting environment from a global perspective.
Different international bodies relating to accounting
profession like US SEC, AICPA, CIMA, IFAC, FASB,
IASB, IASC etc.
Global scenario of accounting, accounting practice
and profession.
Background, scope and functions of ICMAB.
Background, scope and functions of ICAB.

2
2

IE01 B Transaction Analysis, Journal, Ledger and Trial Balance (25%)


Learning outcomes
On completion of their studies students should be able to:
Lead
Component
Level
1. Define different
(a) explain accounts and types of accounts;
2
types of accounts. (b) explain transactions and its characteristics;
2
(c) explain accounting equation;
2
(d) explain duality concept of accounting.
2

Indicative syllabus content


explanation of accounting and types of accounts.
differentiate transaction and events.
identify the characteristics of transaction.

2. Analyze
transaction.

3. Prepare journal,
ledger and trial
balance.

(a) Identify accounting transaction;


(b) Explain the transactions with accounting
equation;
(c) Illustrate a very basic form of statement of
financial performance and position.
(a) Explain debit and Credit - golden rule of
accounting;
(b) Identify journals from transaction analysis;
(c) Post journals to ledger T Accounts and Running
balance;
(d) Illustrate trial balance and prove accuracy.

2
2

explain double entry system of accounting.


Identification of accounting transactions.
Construct accounting equation for each transaction.
Present statement of financial performance and
position.

Explain debit and credit.


Present golden rule of accounting.
Journalize the transactions.
Post the journals to ledger and show the balancing.
Prepare trial balance and prove mathematical
accuracy.

2
2
2
2
2

IE01 C Completion of Accounting Cycles, Worksheet, Financial Statements (30%)


Learning outcomes
On completion of their studies students should be able to:
Lead
Component
Level
1. Steps in accounting (a) Explain accounting cycle;
2
cycle.
(b) Identify various steps in accounting cycle;
2
(c) Describe the relationship among the steps.
2
2. Adjusting the
(a) Describe revenue recognition and matching
2
accounts.
principles;
(b) Explain adjusting entries and its types;
2
(c) Illustrate adjusted trial balance.
2
3. Prepare worksheet (a) Explain Worksheet;
and financial
(b) List closing entries;
statements.
(c) Illustrate post closing trial balance;
(d) Illustrate statement of financial performance,
statement of owners equity and statement of
financial position.
4. Understand
(a) Distinguish between service and merchandising
accounting for
operations;

2
1
2
2

Indicative syllabus content

Identify different steps of accounting cycle.


Aligning different steps in accounting cycle.
Cycles for service and manufacturing companies.
Understanding revenue recognition and matching
principles.
Importance of adjusting entries.
Types of adjusting entries.
Preparing adjusted trial balance.
Preparation of worksheet.
Prepare closing entries.
Prepare post closing trial balance and show its
relationship with statement of financial position.
Prepare financial statements.

Explain merchandising operations.

merchandising
operations

(b) List typical transactions in merchandising


operation;
(c) Identify different types of inventories;
(d) Illustrate financial statements for a merchandiser;
and
(e) Distinguish between single step and multiple step
income statements.

IE01 D Introducing cost and management accounting (15%)


Learning outcomes
On completion of their studies students should be able to:
Lead
Component
1. Introduction to cost (a) Define cost accounting;
accounting.
(b) Classify costs;
(c) Illustrate different cost statements as per BCAS 1.
2. Introduction to
management
accounting.

(a) Define management accounting;


(b) Differentiate management accounting with
financial and cost accounting;
(c) Explain the role of management accounting in
decision making;
(d) Describe
management
accountants
and
management accounting profession.

IE01 E An Introduction to Accounting Information Systems (15%)


Learning outcomes
On completion of their studies students should be able to:
Lead
Component
1. Introduction to
(a) Define accounting, information and systems;
Information
(b) Describe accounting as an Information System;
Systems.
(c) Explain AIS and its environment.
2. General ledger (GL) (a) List special journals;

1
1
2
2

Identify different types of inventories.


Differentiate between perpetual and periodic
systems of inventory.
Identify different types of transaction a
merchandiser usually have like purchase, sale,
returns, discount, cost of goods sold etc.
Presenting multiple step income statement.
Preparing other statements for merchandiser.

Indicative syllabus content


Level
1
1
2
1
2
2
2

Definition of cost accounting and its scope.


Classify costs in terms of manufacturing process and
behavior.
Read BCAS 1 and prepare cost statements.
Definition of management accounting and its scope.
Differentiate management accounting with financial
accounting; and management accounting with cost
accounting.
Decision usefulness of management accounting.
Role of management accounting in management
accounting profession.

Indicative syllabus content


Level
1
2
2
1

Define different types of systems and AIS.


Present accounting as information system.
Interaction of accounting with its environment.
Present different types of journals.

system.

(b) Define chart of accounts;


(c) Identify types of ledger accounts;
(d) Distinguish between general
subsidiary ledgers.

ledger

and

1
2
2

Design chart of accounts.


Classify the ledgers with their objectives.
How general ledger and subsidiary ledger can
provide more classified information.

Recommended Books:
1.
CMA Study Text on Paper IE 01: Principles of Accounting
2.
Weygandt, J. J., Keiso, D. E., and Kimmel, P. D., Accounting Principles, 9th Edition (2010), Wiley & Sons, Inc., USA.
3.
Bangladesh Cost Accounting Standard (BCAS 1)